The government should create mechanisms for businesses to more easily share data to increase the cash flow into small UK businesses, according to the SME Finance Taskforce.
The taskforce, chaired by the government-backed Centre for Finance, Innovation and Technology (CFIT), is a group of banks, fintechs, software providers, credit agencies and industry bodies formed to encourage growth in emerging UK businesses.
Members include Sage, OakNorth, Revolut, Lloyds Bank, HSBC and Experian.
In its recent SME Action Plan report, the taskforce called for a legislative framework for “smart data schemes” to be rolled out across various sectors in the UK to support industries, just as open banking implementation has helped fintechs.
The group argued that requiring the suppliers of goods and services to give customers access to their own data would make it easier for SMEs to secure external finances. The report highlighted how much of the data collection for SME lenders is currently manual, adding costs to the process.
The taskforce claimed the comprehensive datasets from the SMEs could give lenders and funding intermediaries better direction in funding allocation.
This policy could come into law via the Digital Information and Smart Data Bill, announced in the King’s Speech last month, the taskforce said.
“The financial services and fintech industry has worked together to design a comprehensive programme that will energise the UK economy by making the lending experience better for both SMEs and the lenders themselves,” said CFIT chair Charlotte Crosswell.
“What’s particularly exciting is that this doesn’t require significant public spending. While policy implementation inevitably takes time, there are so many levers that industry can pull with the support of policymakers, to quickly build momentum, boost SME lending and unlock growth.”
The SME Finance Taskforce also recommended improved access to digital tax data from HMRC, a reformed Companies House with standardised verification of company information and aligning digital invoicing practices with overseas markets.